Facebook Credits soon to be mandatory for all canvas games
It’s been a while since my last post, but in my defence, I’ve kept busy. And yet, I couldn’t let the following news slip by without commenting on it:
The short of it is that Facebook is going to be enforcing Facebook Credits as a payment method for ALL Facebook canvas games. Those better-connected than I seem to have it on reliable sources that this means that FB Credits will need to be the SOLE payment method for all Facebook canvas games. Paypal? Social Gold? Everyone else? Gone.
The suspicious “we are not requiring developers to use Facebook Credits as their sole in-game currency” apparently is supposed to be read as meaning “You can still have things like FarmCash in-game, but people will need to sped FB Credits to buy it”, which makes sense, though feels pretty ominous.
I’m of mixed opinion on this one.
A common currency pool for micro-transactions can easily benefit all FB game developers. Lord knows, I’ve had leftover FB Credits I had from buying SUPER|brie+ that I spent on Ravenwood Fair or the like. The more FB Credits people buy, the more they are likely to spend.
And apparently Facebook handles them very well. Early adopters are reporting much less customer contact over payment problems. Reducing support costs is always a plus.
Facebook takes a 30% cut. 30 percent! This is insane. Mad. Incredible. Consider that with PayPal, you’re losing out maybe 7%, and that’s if you haven’t spent any time signing up for programs designed to lower that transaction fee.
Facebook is taking the same cut that Apple takes on the app store. They’ve said that they’ll have app store-style promotion for the early converters to FB Credits, which is nice and may offset the incredible fee increase, but what about long-term? What about once everyone’s converted to Credits? How does Facebook decide who gets promoted then, and will there continue to be an offsetting benefit? Time will tell.
One of the neat things that Facebook can do to promote the use of FB Credits is to “comp” people free “Courtesy Credits”. However, instead of taking the hit themselves, they pass this cost along to developers. Check it:
Facebook comps Bobby Beauregard 50 free FB Courtesy Credits. Bobby thinks this is pretty neat and goes and spends it on SUPER|brie+. Sold on the usefulness of FB Credits, Bobby buys 100 more and spends them on CityVille. At the end of the payment term, CityVille gets paid the going rate for those 100 credits, while HitGrab gets nothing – Courtesy Credits aren’t paid out. At all.
So the first terrible part about this is that Courtesy Credits can push your “take” of FB Credits down below even 30%, which is just more bad news. More frightening however, is this gem from the FB Credits Ts&Cs. From section 3-11: “We may however permit you to re-issue courtesy Credits (e.g. expiration or other limits) at anytime for any reason.”
So hold on – we accumulate 500 Courtesy Credits in a month, and can then re-issue them out to whomever we want, say as a promotion? This is neat, except it means that Courtesy Credits will never leave the system. We re-issue those, and people will re-spend them with us, and we continue to get no money. Over time, you can expect the population of Courtesy Credits to rise, and the actual value of the FB Credit to plummet FAR below the currently-advertised 30%.
Now that’s scary.
What can be done?
Not much. Facebook is the platform, and what the platform wants, it gets. Many big names (Zynga, Playfish, Lolapps, if I’m not mistaken) have already gotten on board here, too, so the chance for organized protests is long past. This is going to happen, and all we can really do on the canvas side is watch it unfold.
Companies can start aggressively advertising their FB Connect implementations (i.e. Load the game from www.gamename.com instead of from apps.facebook.com/gamename), though. You can’t use FB Credits off-canvas, so you can happily stay with whatever payment provider you were using there. Your reminder emails, referral links, etc. could all push people to the off-canvas page. You could probably even offer people an incentive to play off-canvas.
But that may not even work out to your benefit, either. People are going to get used to seeing FB Credits everywhere. It’s going to become accepted, and if your “Facebook game” doesn’t let people pay for it using Facebook’s currency, there are going to be a lot of people who just won’t buy.
It’s really hard to know what’s the smart play to make about this. The long-term effects of this are hard to gauge right now. Could be very good, could be fantastically bad. In the short-term, however, it doesn’t look like there’s much more folks can do but convert to FB Credits, tighten their belts, and get ready to see a 20% net revenue drop.